Are Dubai landlords rethinking short- vs. long rentals?

Dubai: Another factor – the star rating system - has started to show up in Dubai landlords wanting to choose between renting out for a year or preferring to go for short-stay letting.

According to market sources, there has been a slowing down in the number of new homes coming for short-term rentals since the start of the year. Dubai’s new digital Rental Index and the star rating system that’s part of it is being cited by some landlords in choosing the 1-year annual rental option.

“Three of the landlords I represent decided to withdraw from short lets and put all their properties for long lease,” said an estate agent. “Together, these three landlords placed around 30-40 units for one-year leases, and got tenants immediately at higher than market averages.

“Buildings with high star ratings are able to command much more in the current market situation. Our clients felt this was too good to miss out on.”

Under Dubai’s new Rental Index, a star rating assigned to each building should dictate what landlords can ask for – and on existing leases, sets ranges on how much more they can demand. What this has done is create fresh possibilities for landlords in the longer term rental.

It is also a conversation that more landlords with properties in Dubai are having, and with more when new apartments are delivered in the coming weeks. It’s more or less a given that newer buildings will have a higher rating – giving their landlords the latitude to ask for a higher rents.

At the same time, there are real estate sources say who believe that rental growth in the short-stay market has actually started to plateau out. They point to the sheer number of new units that entered the market during 2024, which also coincided with short-stay rental growth slowing down after two fairly brisk years.

The relative slowing down has extended into this year, which leaves landlords with less wiggle room to ask and get rates they demand.

Vinayak Mahtaini is CEO of bnbme, a business that specializes in shirt-term rentals and management.

“I don’t believe the number (of short-term rental properties) has declined - but the growth it used to have has slowed down,” said Mahtani.

“There are over 40,000 apartments now in the short-term market in Dubai. There is still value in these rentals for property owners. I think we will see a slight correction in the market where companies not adding extra value for the guest or property owner will start to fade away…

“I don’t think a property owner should only be looking at rental income when they think of what to do with the property.  Long-term rents have many hidden costs such as refurbishment when the tenant leaves, which also means the apartment will be off the market for weeks.

“Asset preservation is what owners should be looking at along with the peace of mind that they are in possession of their property.”

Dubai short-stay rentals are seeing gains for this week’s Eid holidays, with the popular locations seeing optimum take up rates, say industry sources. This upbeat demand will continue through to peak summer before slowing down.

It would leave landlords with enough time to choose between long or short rentals

Anna Skigin, CEO of Frank Porter, says that landlords choosing short lets have another advantage – “It is also about the flexibility of using the unit - or selling the unit when you want without having to deal with a tenant. There are more considerations to look at when looking at short-term versus long than one annual rent.”

Now, which way will Dubai landlords with new properties being handed over decide to go?

Dubai’s short-stay rental market is hoping that rates would soon start to show a bit of a growth spurt after a relatively slow start so far in 2025. “This year’s Eid booking has been slightly soft with it coinciding with school holidays,” said Vinayak Mahtani of bnbme. “The staycation market is missing seeing rates between $100-$250 a night, which are about 30% down from last year.” This will also be something that landlords will be giving close watch to.

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